Concerns raised over ECG revenue exclusion from Cash Waterfall Mechanism
Dr. Steve Manteaw, Co-chair of the Ghana Extractive Industry Transparency Initiative, has voiced concerns regarding the exclusion of approximately 50% of the Electricity Company of Ghana’s (ECG) revenue from the Cash Waterfall Mechanism (CWM).
In an interview on Joy News’ PM Express on October 21, he highlighted the credibility issues this exclusion poses for the financial recovery of the energy sector, which the CWM was designed to support through equitable fund distribution among stakeholders.
“It surprises me that despite the substantial increase in revenue, nearly half of the funds generated are kept outside the CWM,” Dr. Manteaw stated during his discussion with host Evans Mensah. He emphasized that while the CWM was introduced as a financial innovation to enhance the sector’s liquidity, its current implementation does not adequately address the financial challenges facing the industry.
“The mechanism isn’t a complete solution, but it does provide some relief, allowing us to keep operating,” he added. Dr. Manteaw explained that the decision to exclude a significant portion of ECG’s revenue from the CWM arises from the company’s need to cover operational costs before distributing funds into the system.
“ECG has clearly indicated that meeting their operational expenses is a priority, yet this perspective has not been fully recognized by policymakers,” he remarked, drawing parallels to the long-standing request from the Ghana National Petroleum Corporation (GNPC) for proper revenue acknowledgment.
The issue has drawn attention from the Public Utilities Regulatory Commission (PURC), which has noted that ECG has opened multiple bank accounts to retain funds outside the CWM. “Dr. Manteaw pointed out that this action seems deliberate, further complicating the financial landscape.
He emphasized the need for improved dialogue with ECG to better understand and address their concerns. “We need to engage with ECG to accommodate their needs. If they funnel all their revenue into the CWM, they argue that they won’t have sufficient funds for their operations,” he stated.
The exclusion of half of ECG’s revenue also raises questions about the private sector’s role in addressing the sector’s debt crisis. “This creates a credibility problem for the entity responsible for revenue assurance,” Dr. Manteaw stressed, underscoring the importance of transparency in evaluating the contributions of private companies. Dr. Nii Darko Asante, a former Board member of the Public Utilities and Regulatory Commission (PURC), placed the blame for the shortcomings of the Cash Waterfall Mechanism squarely on the Electricity Company of Ghana, indicating that the situation calls for urgent attention and resolution.
